The Account The following transactions occurred during January, the first month

Question

The Account The following transactions occurred during January, the first month of operations for Ruby Corporation. Prepare journal entries and create a T-account for inventory that includes the following five transactions. Hint:When inventory is sold, it should be expensed to a Cost of Goods Sold expense account. 1 Purchased $950 of inventory on account. 2 Purchased $1,800 of inventory on account. 3 Sold inventory with an original cost of $450 4 Purchased $1,100 of inventory on account. 5 Sold inventory with an original cost of $1,500.

Explanation / Answer

General Journal Date Description Debit Credit 1) Inventory $950          Accounts payable $950 (To record purchase of inventory on account) 2) Inventory $1,800          Accounts payable $1,800 (To record purchase of inventory on account) 3) Cost of goods sold $450 Inventory $450 (To record cost of inventory sold) 4) Inventory $1,100          Accounts payable $1,100 (To record purchase of inventory on account) 5) Cost of goods sold $1,500 Inventory $1,500 (To record cost of inventory sold) Inventory 1) $950 2) $1,800 3) $450 4) $1,100 5) $1,500 Balance $1,900

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